FDI expected to increase over next five years

Dubai: The foreign direct investment (FDI) grew by eight per cent globally in 2013 at a value of $1,461 billion and it is expected to increase at least 10 per cent annually in the next five years, according to the Foreign Direct Investment Report 2013.

The report, is which developed by FDI Intelligence division of the Financial Times and released on the opening day of the Annual Investment Meeting 2014 in Dubai, aims to provide a comprehensive insight into FDI trends in the emerging market, said David East, business development Director at FDI Intelligence.

East said that the emerging markets, defined as all developing and transition economies, have increased their market share in the global FDI inflows in 2012 to 58.4 per cent.

Emerging economies have been increasing their share of global FDI inflows gradually since 2008, despite a very marginal decline of 3.6 per cent in 2011, East added. Global FDI declined in 2012 by 18.2 per cent from $1,651 billion in 2011 to $1,350 billion in 2012.

Tan Sri Muhyiddin Yassin, Deputy Prime Minister of Malysia, said that emerging markets will lead the global FDI flows in the coming years.

He expected the Asian's economies to achieve sustainable growth of 5.5 per cent and called on governments to place major emphasis on their current economic performance.

"Malaysia will be growing economically according to the government economic transformation program and strategic reformation initiatives," he said.

This in turns will provide new investment opportunities, Yassin said.

Asia and Pacific has accounted for the biggest share of FDI inflows every year over the period 2008-2012 at a value of $356.8 billion in 2013, equal to 44.7 per cent of all FDI inflows into emerging markets and 26.4 per cent of global FDI, according to the report.

The report forecast that the emerging markets will continue to attract over half of FDI flow. FDI into North America is expected to grow the fastest with strong growth in energy investments.

However, East highlighted that Asia's importance as a net outward investor will continue to grow and is likely to overtake North America to become the world's largest overseas investor measured by FDI.

Greenfield projects

Investment is greenfield projects is expected to be a major trend in global FDI, according to the report. Global greenfield FDI increased by 5.9 per cent in 2013. This result demonstrates that despite a challenging time for investments portfolio, long-term FDI is continuing to grow.

The report also released that Greenfield FDI in the emerging markets grew by 14.6 per cent in 2013 and these markets account for 74 per cent of Greenfield FDI and 60.5 per cent of the global Greenfield FDI flows.

Top destinations

The top destinations for FDI inflows in the Middle East in 2012 were Saudi Arabia, UAE, Iran, Lebanon and Iraq. The UAE has achieved significant year-on- year growth since 2009 with its figure up by 24.7 per cent in 2012.

According to United Nation Conference on Trade and Development (UNCTAD), FDI inflows into the Middle East were valued at $39.7 billion in 2012, which was a 6.7 per cent increase on the 2011 at a value of $37.2 billion.

Saudi Arabia accounted 30 per cent of all FDI inflows into the region at a value of $12.2 billion in 2012.